Consumer Behaivour:

Introduction
Dr Manoj Kumar Dash

Unit-1
Consumer Behavior: with special
reference to Indian consumer
Demand Analysis
Elasticity of demand
Measurement of Elasticity of Demand
Demand Forecasting
Case study

Consumer
Diversity

18/03/2008

Reasons for Studying

Consumer Behavior
To stay in business by attracting and
retaining customers
To benefit from understanding consumer
problems
To establish competitive advantage
PROVIDES INSIGHTS WHY CONSUMERS BUY
GOODS AND SERVICES
HOW THEIR PURCHASE DECISIONS ARE
MADE, AND
FACTORS
THAT
INFLUENCE
THEIR
DECISION-MAKING PROCESSES
because it is interesting!

The Indian Consumer Is Rapidly

Transforming
Paradigm Shift in almost all aspects
of life

Outlook From Traditional to Modernized Traditional

Expected Utility from Products/

Services
From Functional to Lifestyle

Eating habits
From traditional meals to Indianised McDonalds

Players across Verticals

Food and Grocery

Clothing and Textiles

Jewelry and Watches

Footwear

Source: Industry Sources

Players across Verticals

Home Dcor and Furnishings

Electronics

Beauty Care

Books and Music

Source: Industry Sources

CONSUMER BEHAVIOUR
THE BEHAVIOUR THAT CONSUMERS DISPLAY IN
SEARCHING FOR, PURCHASING, USING,
EVALUATING, AND DISPOSING OF PRODUCTS
AND SERVICES THAT THEY EXPECT WILL SATISFY
THEIR NEEDS.
STUDY OF HOW INDIVIDUALS MAKE DECISIONS
TO SPEND THEIR AVAILABLE RESOURCES
<TIME MONEYEFFORT> ON CONSUMPTION
RELATED ITEMS.

CONSUMER BEHAVIOUR
STUDY OF :

*
*
*
*
*
*

WHAT THEY BUY

WHY THEY BUY IT
WHEN THEY BUY IT
WHERE THEY BUY IT
HOW OFTEN THEY BUY IT, AND,
HOW OFTEN THEY USE IT

STUDY OF THE PROCESSES BY WHICH

CONUMERS
MAKE
DECISIONS.
MORE
SPECIFICALLY, IT IS CONCERNED WITH HOW
CONSUMERS ACQUIRE ORGANIZE AND USE
INFORMATION TO MAKE CONSUMPTION CHOICE.

Indias share of world

population has increased
from 14% to 17%

Source : UN population database

Younger

Source : NSSO

13

Four Phases of Economic

Growth
GDP CAGR

First wave of
liberalization
. Emergence
of services

Rapid growth phase

driven by services. Reemergence of
manufacturing
industry, issues @
agriculture

Socialist India
Hindu rate of
growth
Colonized India.
No industry or
services, only
taxes

14

Indian Economy to become

more Services Led
Agriculture

33%

16%

26%

9%

Industry

Services

40%

199
1

67%

54%

200
0

201
0

76%

202
0

Source : NCAER, Indicus Analytics

15

18/03/2008

Advantage India
Fastest Growing Economy
GDP growth rate of 9.4% posted in 2006-07 is
highest ever in last 18 years. With the first quarter
growth rate for 2007-08 estimated at 9.3%, the
economy is well poised to continue its growth story.
The fast pace of GDP growth is the driving Indian
consumerism; the Indian consumers today are
more confident and willing to splurge
Source: Reserve Bank of India

The Young India

Two-thirds of Indias population is under 35 years
of age and more than 60% of the population will be
in the working age group (15-60) till year 2050.
The median age of 23 years, opposed to the world
median age of 33, sets the emerging young India
apart
India is home to about 20% of the global population
under 25 years of age.
Source: India Census

17

CB : A SYNTHETIC FIELD OF STUDY

SOCIAL
PSYCHOLOGY

PSYCHOLOGY

CONSUMER
BEHAVIOUR

ANTHROPOLOGY

SOCIOLOGY
ECONOMICS

Market Classification
The Globals:
Who buy the most expensive consumer products

The Strivers:
Who buy the bulk of all consumer goods marketed in
India

The Seekers:
Who own some durables especially, televisions and small
home appliances

The Aspirers:
Who possess the most basic durables such as transistor
radios, bicycles, and aspire for the rest

The Deprived:
Who are generally not consumers of manufactured goods
18/03/2008

Model of
Consumer
Behavior

Factors influencing Consumer Behavior

Types of Buying Decision

Behavior

Habitual buying behavior occurs when

consumers have low involvement and there

is little significant brand difference.
Variety-seeking buying behavior occurs

when consumers have low involvement and

there are significant brand differences.

The Buyer Decision Process

Five stages in the buyer decision process
1. Need recognition
2. Information search
3. Evaluation of alternatives
4. Purchase decision
5. Post-purchase behavior

The Buyer Decision Process

Post-Purchase Decision
Customer satisfaction is a key to

building profitable relationships with

consumersto keeping and growing
consumers and reaping their customer
lifetime value.

Options Identified and

Considered
UNIVERSAL SET

All possible
options

RETRIEVED SET

Options that
readily come to
mind
Options that will
be considered by
the consumer

Note: Retrieved and

evoked sets will vary
among different
consumers

EVOKED SET

I
Total set

How many brands to

consider ?
II
Awareness Set

ACN
Godrej
Network
Aurelec
Gestener
PCL
Facit
Wipro
0
0
0

ACN
Facit
Network
Gestener
Wipro
Aurelec

V
Choice Set

Vi
Choice

Network
Gestener
Wipro

III
Inept Set

ACN
Aurelec

Iv
Consideration set

Facit
Network
Gestetner
Wipro

Life on EMI

Evolving Consumer
Behavior
Changing Face of Indian
Consumerism

Integrated Retailing Formats

Lifestyle patterns of Indias middle class are

getting redefined with adoption of western values
and growing brand consciousness

Department Stores
Cash and Carry
Retailers are rapidly integrating and diversifying

of Indian consumerism is buoyant

new entrants

and player revenues across all the verticals.

Increased consumer exposure to the latest trends
and brands driven by the mass media, retail
revenues are soaring

Malls
Discounters

From a saving to a spending mindset, the face

Marked increase in the number of

Modern retailing formats:

their store formats to cater to emerging trends in

consumer behavior.
Food Bazaar stocks staples in bulk; weighing and
packing them for customers in their presence
catering to the touch and feel mindset of buying
staples whereas Reliance Fresh stocks fresh flowers
and vegetables.
Retailers are expanding into the emerging cities
with modest store formats as opposed to the glitzy
mall formats adopted for metros.

28

A LEADING INDIAN TV COMPANY IN THE COUNTRY IS

FINDING IT VERY DIFFICULT TO MAINTAIN THEIR
MARKET SHARE.
ITS SALES ARE GOING DOWN .
THEY HAVE HIRED YOU TO SOLVE THE PROBLEM.
Explain the situation and give your PERSPECTIVES
TO SOLVE
THE PROBLEM.

THANKS ..